Oil retreats from six-week high to near $71

By IBT Staff Reporter08/06/09 AT 1:24 PM

U.S. oil prices retreated from a six-week high on Thursday, pulled lower by weakness on Wall Street and gains in the U.S. dollar.

U.S. crude fell 85 cents to $71.12 a barrel by 1645 GMT, after touching a peak of $72.42 earlier in the day, the highest since late June. In London, ICE Brent crude fell 74 cents to $74.77, after hitting a new 2009 high of $76.

This price action still looks like a pause in a short-term bull market from our perspective, said Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois.

The losses came as Wall Street dipped into negative territory as drops in telecommunications and biotechnology stocks offset optimism about the economy. Oil prices have tracked equities markets closely in recent months.

Adding downward pressure, the U.S. dollar made headway against other currencies, lowering the purchasing power of holders of other currencies.

Oil prices have climbed sharply since winter as dealers anticipate an eventual rebound in the global economy that could revive ailing world energy demand.

But the rally in recent months has come even as depressed consumption levels bulk up oil stockpiles in the biggest consumer nations.

U.S. crude inventories rose by a much-higher-than-expected 1.7 million barrels in the week to July 31, according to data from the U.S. Energy Information Administration on Wednesday.

The premium of ICE Brent futures to U.S. crude increased on Thursday and was as high as $3.99 a barrel, helped by summer maintenance in the North Sea and high U.S. inventories at Cushing, Oklahoma.

Analysts said that gains in Brent were also due to a lower perceived regulatory risk on ICE, following calls for greater scrutiny of commodities trading in the United States.

The U.S. Federal Trade Commission on Thursday announced new rules aimed at curbing energy market manipulation.

Meanwhile, the U.S. Commodity Futures Trading Commission has been studying position limits in energy markets to clamp down on speculation.

The UK Financial Services Authority and the UK Treasury also met with oil industry representatives this week to discuss market transparency and regulation, but issued no statement.